Dead cat bounce

Dead cat bounce : Phrases

Meaning:

A small and temporary recovery in a financial market following a large fall.

When a financial market suffers a consistent fall traders attempt to detect when prices are at their lowest and then buy stocks hoping for a bargain. If they buy too soon prices may rise temporarily but then decline again. This is called the dead cat bounce. The idea being that even a dead cat will bounce if you drop it from a great height.

The phrase seems to have struck a chord and other 'bounce' phrases have emerged, notably 'Baghdad bounce'. This is the rise in popularity that both George Bush and Tony Blair enjoyed following the fall of Baghdad in the Iraqi War. That popularity waned somewhat later when it became clear that pulling allied troops out of Iraq was likely to take longer than the public had first anticipated.

Origin:

The earliest citation I have found is in an article by Chris Sherwell in The Financial Times, December 7, 1985:

"Despite the evidence of buying interest yesterday, they said the rise was partly technical and cautioned against concluding that the recent falls in the market were at an end. This is what we call a 'dead cat bounce', one broker said flatly."